AUTOMATION AND EXCELLENCE IN PUBLIC FINANCIAL MANAGEMENT: Overcoming the Challenges & Sustaining

Transcription

1 AUTOMATION AND EXCELLENCE IN PUBLIC FINANCIAL MANAGEMENT: Overcoming the Challenges & Sustaining the Success Ugas Mohamed Globetek Systems (K) Ltd Credibility. Professionalism. AccountAbility

2 Table of contents 1. Introduction to PFMS - definitions 2. Value proposition for PFMS automation 3. Integrated vs. non-integrated systems 4. Features of IFMIS 5. History of PFMS in Kenya 6. Success and Challenges of IFMIS implementation 7. Way forward Lessons learnt

3 PFMS Policy Reforms.. Policy Reforms Mandated by New constitution 2010 : Fiscal decentralization and PFM reforms PFM Act 2012 CRA Office of Controller of Budget PAC CIC

4 PFMS Intro.. Today, strong financial management in the public sector is not a luxury but a necessity. We are in an era of increased demand for accountability and transparency the "stakeholders" of the public sector are demanding more effective and efficient use of public resources Integrated Financial mgt System (IFMS) aims at improving accountability by enhancing transparency and oversight in govt operations. IFMS applies high technology to enhance financial mgt and reduce mismanagement and corruption

5 PFMS Intro.. Widely acknowledged that fully functioning IFMS contributes to improved governance, by providing real-time financial information that financial and other managers can utilize to effectively administer programs, develop budgets and manage resources. During the past decade, IFMS has been implemented in Africa with varying degrees of success. Where IFMS has been introduced successfully, It has increased public sector legitimacy, produced timely and efficient accounting of public resources, increased government accountability and transparency and made it possible to audit public accounts and strengthen internal control in government units

6 Automation o Accountability the ability of public officials (politicians and technocrats) o to answer for their actions and inactions and o to show evidence that public funds were utilised for public Interest Value proposition- otransparency- ready access to reliable, comprehensive, timely, understandable, and internationally comparable information on government activities o Predictability procedures laid down by laws, regulations and administrative instructions that are: o clear and known in advance (documented), o uniformly and effectively enforced. o Participation decentralization and allowing participation in decision making all levels of govt through representation, voting

7 Without IFMIS- Financial Issues Poor Control Overspending Unrealistic Budgets Revenue & Expenditure Focus on inputs rather than outputs Growing Pending Bills Problem Spending Not Aligned to Priorities. Poverty, etc. Fraud, Corruption Lack of Transparency & Good Governance Poor Management of transactions/documents Lack of effective auditability Procurement Poor Value for Money And many more leading to poor delivery of Public Services

8 System Issues -without IFMS Fragmented PC Systems and Mainframe System Duplication of Data Capture Information Locked Away in Systems Lack of Real Flexible Reporting Lack of Analysis Limited Support to Operations Use of Runners to Collect Data Diskettes No One Overall System. Need for Truly INTEGRATED SYSTEM And many more

9 What is PFMS Public Financial Management System (PFMS) is designed to: support all financial operations, collect accurate, timely, complete, reliable and consistent information on all public financial events, provide adequate management reporting, support government-wide and agency policy decisions, produce auditable financial statements

10 IFMIS Core Treasury System includes the following components: o Budget Execution and Monitoring o Accounting (general ledger, management of payments and receipts) o Cash Management o Financial Reporting o Purchasing / Commitment o Asset / Inventory Management o Operational support for Spending Units Other Public Financial Management System components: o Macro Economic Forecasting o Budget Preparation and Approval The combination of above components is o Debt and Aid Management referred to as integrated PFMS o HR Management /Payroll Calculations o Support for Financial Control and Auditing o Web publishing Financial Management Information System

11 IFMIS Layout Public Sector Budgeting Cash Management Purchasing E-Procurement Accounts Payable Accounts Receivable General Ledger Core Accounting & Reporting Inventory Asset Management Fleet Management Treasury Management Reporting Tools HRMS & Payroll Reporting and Analysis Thro Reporting tools

12 PFM Life Cycle Policy Formulation and Review 1 Budget Preparation 2 Budget Execution 9 Audit and Evaluation Budget Authorizations 3 8 Budget Review & Accounting Implementation Commitment of Funds 4 Purchasing 7 Debt and Aid Mgt Payments and Receipts Mgt 5 6 Asset / Inventory Mgt Cash Mgt Payroll/

13 Adoption of IFMIS globally - WB The FMIS Data Mapper provides quick access to 133 World Bank-funded FMIS projects in 74 countries in Google Maps (as of August 2015).

14 Status of IFMIS global Since 1984, the Bank has assisted 74 countries in the design and implementation of Treasury and FMIS solutions for country specific PFM reform needs. In particular, the Bank has financed 121 projects, including 86 complete and 35 active, totaling over 3.5 billion USD (as of August 2015).

15 IFMIS in Kenya Where we came from GoK, through the Accountant General s Department undertook an in-depth analysis of financial management and audit, people management and organization and financial management information systems in the government Development of IFMIS commenced 3 Phase review process, 2 phases done DFID Dev assistance Strengthening Govt finance and Accounting functions Comprehensive project framework (CPF) developed IFMIS implementation commenced taking over from SIBET system Procured Oracle Government Financials for Public Sector by State Informatics Ltd -Mauritius and Simba technology Ltd -Kenya 2006-PFM reform coordination unit at MOF recognize IFMIS contribution to six PFM reform pillars

16 .. Then M/S Info tech Associates Ltd consultancy situational analysis of IFMIS implementation and action plan to fast track IFMIS Dev IFMIS project charter - Re-engineering of business processes, comprehensive mgmt and technical infrastructure to support IFMIS deployment In 2010, the Government developed a Master Plan for IT shared services across the 42 ministries and 175 local authorities. The government recognized that the investments in the current IFMIS must be balanced with the requirements of the new Constitution and the need for automation. This called for an automated budgeting system for the financial year 2011/ IFMIS Re-engineering guided by strategic plan

17 IFMIS Biz Re-engineering.. Re-engineering for Business Results: Re-engineer business processes for improved fin mgmt. Plan to Budget (P2B): Provide a structured framework for development and deployment of a fully functional, automated planning and budgeting Procure to Pay: Create an end to end automated process starts at devmt of procurement plans, to actual procurement of goods and services, to payment of suppliers for goods or services delivered. Revenue to Cash: Provide functionalities for collection, recording and classification and reporting of Government revenue. It involves all activities related to revenue and cash management from generation, collection, recording of revenue and distribution of funds to the ministries.

18 ..further Record to Report: Encompasses all activities that include the updating and maintenance of the general ledger, the reconciliation of sub ledgers to the general ledger and closing of books. It also includes recording, control and reporting on fixed assets at both National and County level. ICT to Support: Provide the technical support underpinning effective and efficient automation of all the IFMIS processes. Provides the infrastructure and support required for a fully functional financial management system. Communicate to Change: Focuses on change management, capacity enhancement, information generation and dispersion, education and effective communication among IFMIS stakeholders

19 Re-engineering IFMIS Re-engineering programme adopted a policy direction from a modular to full cycle end to end framework. Moved away from silo based implementation of modules, to an end to end integrated framework in which users would be cognizant of their roles and responsibilities within the entire spectrum of public financial management. The programme activated additional financial modules-cash Management, Fixed Assets, and Accounts Receivable in ten pilot ministries. The functions and operations of the existing financial modules were also stabilized. Approval processes in transaction processing and payments were automated in the system. An IFMIS Academy was established to enhance capacity of IFMIS users both at the national and county governments. Online and in Classroom training A new Single Chart of Accounts (SCOA) was developed and mapped into the IFMIS. Facilitated the consolidation of both budget and financial information, and incorporated elements that would support programme based budgeting, and facilitate analysis of budgets and expenditure by geography, programmes, projects and donor facilities

20 Successes IFMIS implementation Strong Audit Trails (for all Financial Transactions) Visibility of all Transactions leading to TRANSPARENCY Secure, Robust and Reliable Systems Best Practice Full Expenditure Control at Commitment Level Improved Revenue Analyses Targets, Trends, Improved Revenue Management Management, Analysis and Control of Pending Bills Treasury Management, Issuing and Redemption of T Bills

21 More successes Support to Procurement Reforms and Effective Procurement Support to MTEF Costing Activities Fully Integrated System More Efficient and Effective High levels of automation - Bank Recs, Expenditure Returns Linkages and Information Sharing with Other Systems Flexible Information, Analysis & Reporting Financial and Process TRANSPARENCY, ACCOUNTABILITY, COMPLIANCE GOOD GOVERNANCE

22 More success Value For Money, Effective Procurement.More Resources Available More effective utilisation of funds Spending Aligned to Priorities & Policies Eliminate Un-authorised/Over spending Reduction of Pending Bills Effective Flow of Funds.. Districts Improved Delivery of Public Services Reduced Poverty Lives Saved

23 Challenges Book-keeping discrepancies ( PAC, Min of Energy) Institutional resistance, lack of commitment, suspicion etc Capacity issues ( Implementation & Support, IFMIS academy ) Human resources Technology platforms Poor data quality from backend systems Constant upgrades required to keep pace with technology Maintenance costs Centralized corruption Cyber security NYS? Disaster recovery

24 Lessons Learnt Institutional factors are far more important than the technical choice in determining the outcome of automation; Information techno logy should not be the driver of financial reform indeed, if it had been, the Ethiopian reform would probably not have been implemented; There is no a priori technical reason to favor either an off the shelf (OTS) or a custom solution: the choice depends on the circumstances. However, the opportunities created by a custom solution for learning by doing and creation of ownership provide strong arguments to balance the putative advantages of an OTS solution. Effective project se lection and management is a major factor in success of automation; (5) a financial and social cost benefit analysis should be undertaken in reviewing a policy of introducing and/or continuing with a custom system or upgrading to an OTS solution.

25 Way forward? THANK YOU QUESTIONS?